Friday, April 6, 2012

German and Swiss newspaper articles about private banks creating money.

“Not only the European Central Bank is allowed to create money, but also any normal bank. They create their credits from nothing.”

This is a translation of part of the article (in green):

The Occupy movement maintains the provocative thesis that it is the banks who do create money in our economic system. “Profit-seeking private institutions that are in no way democratically controlled, are creators of money.” This is dangerous, says Occupy.

Occupy is right, not with the assessment, but with the explanation. It’s the banks that created most of our money. Namely large commercial banks such as the Deutsche Bank and Commerzbank as well as small credit unions and savings banks.

About the growth of money supply are actually deciding banks but also private individuals and companies - depending on how much money they borrow or lend.

But not only in Occupy, even in science there is a debate over whether after the banking crisis experience the money creation can be left to the banks. Ironically, the thesis supervisor of current CEO of Deutsche Bank Josef Ackermann, Hans Christoph Binswanger, is one of the protagonists.

Another German daily newspaper die Tageszeitung published the whole interview with Prof. Joseph Huber – the leading representative of monetary reform initiative in Germany and co-author of the book Creating new money.

And then we have Swiss daily newspaper Schweizer Zeit that explains in detail how the current way of money creation by commercial banks developed throughout history and how it makes the economic system inherently unstable. And it also introduces the idea of full-reserve banking as a solution.

Hat tip to Gerard Barrie who is interested in monetary reform and lives in the North East of England near me.